Basic Steps to Outsourcing Success, Steps to Success in Outsourcing

Basic Steps to Outsourcing Success

Introduction

There are a few fundamental steps to ensure the best results for your outsourcing venture. These strategies help to reap maximum benefits as also avoid pitfalls and complications.

Remember that as an outsourcing client you are out to get your task done by experts in the specific area. This can start with the outsourcing procedure itself, especially if your company is a beginner to outsourcing. A good consultant can help you wade through the entire process. If on the other hand if you choose to handle the decision making process in-house, these are the steps that need to be followed.

Analyze Needs

Study your own business case, meaning the areas
that need to be or can benefit from being outsourced. Segregate your company's
core activities and the secondary/ support activities. Which of these secondary activities are proving to be high-cost, low performance areas? Is outsourcing the right thing to do?

There are a few products and services that constitute the core of your business and therefore can't be handed over to third-parties. Which of the other supporting areas are problematic to your company's efficiency? These are the tasks that usually benefit from outsourcing to an expert in that particular area. Also consider the costs/ time element if these problematic areas were tackled in-house.

Study Options

At this stage, you compare what needs to be done to what is available with the outsourcing vendors. Study the area you might want to outsource and list out all its segments and functions. Also identify the improvements/changes you will need. Put this down on paper.

After this, you can identify and contact outsourcing vendors and place a query. (It is also important to sign a mutual Non Disclosure Agreement before either of the parties reveals their plans). The service provider might ask for more information to ascertain if their capabilities match your needs, so be prepared with answers and guidelines for the likely questions.

Next you will need to send a Request for Quote (RFQ)/ Request for Proposal, where you will also list out your own requirements. Compare the proposals of a few vendors and see if the project is economically viable, taking both qualitative and quantitative aspects into consideration. Once you have identified the most sensible plan, either you or the vendor can develop a draft of the contract and get it approved by the other party.

Implementation

At the implementation stage, you will be transferring data and knowledge to the vendor and finalize the best practices. This is where the operations begin.

A thorough, step-by-step project plan is integral to successful implementation. The activities, deliverables, targets and timelines are all defined clearly. Have a weekly review system in place so that problems are sorted out early on. This is a time of rapid action, where you cannot afford delayed decisions. Therefore the service provider has to present you a plan you can keep track of, and also clarify penalties for not meeting the important milestones.

If the project involves transferring staff to distant locations, have them ready for relocation well in advance. Also have a plan to tackle possible shortage of manpower at your facility. The involvement of your own staff depends entirely on the nature of your company's work and the task being outsourced- it could be something as simple as transferring data from the vendor's system to yours, or it could be something very complicated that you will need to devote an entire division to the task.

Review Progress

As mentioned earlier, have regular review meetings to check on the progress. This involves the performance of both the vendor and your own staff involved in the project. Give measurable targets to each section of the project. Have specific Service Level Agreements (SLA) with time bound targets in place. Establish a contract that equates pay to performance, as this ensures best results from the vendor.

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